Consider the Following Data: Equilibrium Price = $12

question 45

Multiple Choice

Consider the following data: equilibrium price = $12.50, quantity of output produced = 1,000 units, average total cost = $15, and average variable cost = $13. What will the firm do and why?

• A)Shut down in the short run, because price is below average variable cost.
• B)Shut down in the short run, because it will be taking a loss of $2,500 if it continues to produce which is less than the loss it will earn if it shuts down.
• C)Continue to produce in the short run, because price is greater than average variable cost.
• D)Continue to produce in the short run, because firms are always stuck with having to produce in the short run.
• E)none of the above

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Definitions:

Top-level Managers

Senior executives responsible for making strategic decisions and overseeing the entire organization's operation.

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A structured framework for evaluating projects or tasks based on five key aspects: Purpose, People, Process, Product, and Progress.

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The continued effort to do or achieve something despite difficulties, failure, or opposition.

5P Checklist

A framework used in project management that focuses on five key elements: People, Product, Process, Project, and Purpose, to ensure comprehensive planning and execution.